JImmy Haslam, CEO of Pilot Flying J, spoke with the media in 2013 on the state of the company's response to the federal investigation related to manual rebates issued to trucking company customers.

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The board of the directors for Pilot Flying J agreed to pay the defense bills for its president, executives and sales staff accused in an $85 million rebate rip-off scheme, new documents show.(Photo11: Michael Patrick / Knoxville News Sentinel)Buy Photo

The board of directors for the nation’s largest diesel fuel retailer agreed to pay the defense bills for its former president, executives and sales staff accused in an $85 million rebate rip-off scheme, new documents show.

The agreements were filed recently in U.S. District Court, where former Pilot Flying J President Mark Hazelwood, executive Scott Wombold, and account representatives Heather Jones and Karen Mann are set to stand trial on charges including conspiracy to commit wire and mail fraud.

The FBI and the IRS Criminal Investigation Division raided Pilot Flying J’s headquarters in Knoxville in April 2013 after years of investigation and hours of secret recordings by moles within the company, court records have shown.

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Fourteen Pilot Flying J ex-employees have agreed to plead guilty in the multi-million-dollar fraud. Here's what you need to know.
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Trial looming

Chief Executive Officer Jimmy Haslam has denied knowledge of the scheme. He is not charged. The Pilot Flying J board of directors confessed corporate guilt, entering a criminal enforcement agreement with the U.S. Attorney’s Office in which the board agreed trucking firms had been defrauded and paid $92 million as punishment.

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Pilot Travel Centers CEO Jimmy Haslam stands in front of a map showing where each of the company's travel centers are located in this Oct. 16, 2006 file photo.(Photo11: News Sentinel)

The board also agreed to cooperate in the probe against its own executives and employees. The firm also has paid $85 million to the dozens of small trucking firms that were promised rebates they didn’t get.

“The company has agreed to advance attorneys fees and expenses incurred by me or on my behalf,” the documents stated.

The four employees agreed to repay that money if they are convicted and lose on appeal.

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Former Pilot Flying J President Mark Hazelwood, left, leaves court after being arraigned Feb. 9, 2016, on charges including conspiracy to commit wire fraud and mail fraud as well as witness tampering. Seven other Pilot employees also were named in the 14-count indictment. Hazelwood faces an additional charge of witness tampering.(Photo11: Michael Patrick / News Sentinel)

The prosecutors have filed notice they intend to call as a witness Pilot Flying J accountant Darren Seay, a 15-year veteran tasked by the board to audit the firm’s books after the raid. Seay will testify about how much trucking firms were defrauded and how much Pilot employees earned in commissions as a result.

Pilot agreed to help feds

Defense attorneys for Hazelwood, Wombold, Jones and Mann contend Seay had no role in the direct sales division in which the fraud scheme operated.

“His involvement with these matters had nothing to do with his personal duties or experience at Pilot,” the attorneys wrote in a motion.

Hamilton countered Seay helped build the computer programs used to calculate diesel fuel rebates and used those tools to figure out how much the firm had defrauded trucking firms, which had filed lawsuits against Pilot Flying J soon after the raid.

It will be up to Collier to decide.

The trial was moved to Chattanooga, where Collier is based, although defense attorneys pressed to have the trial moved even further from Pilot’s home base of Knoxville. They are now asking Collier to give them more chances to kick potential jurors out of the jury pool without having to state a legal cause. It’s known as a peremptory challenge. They cite extensive pretrial publicity as cause.

They also are asking Collier to add language to legal instructions that will be given to jurors supportive of the defense position in the case.

For example, the attorneys want Collier to include this statement:

“For you to find that a particular defendant joined a conspiracy, it is not enough for the evidence merely to establish a climate of activity that reeks of something foul.”